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Unify Your Risk Management Data for Better Decision Making

Steve Cloutman


risk management dataIf you’re anything like me, you’ll enjoy having everything in one place. And, when I speak with clients they often tell me that having all their risk and insurance data in one place is the biggest benefit of using our risk management information system software

So, in this blog post I wanted to highlight some of the key advantages that unifying all your risk and insurance data in one system can have, rather than using a variety of databases and spreadsheets.

1. One version of the truth

The primary advantage of using a single system for aggregating data is to achieve a single version of the truth for all your organisation’s risk and insurance data.

The advantages include:

  • It saves time for employees, by eliminating duplicate data entry and other data collection and management tasks and it simplifies report building tasks.
  • It improves transparency of the risks facing an organisation, because anyone who needs to, can, at any time, view and update the organisation’s entire risk and insurance intelligence.
  • And, it speeds up the ability to make data-driven decisions about how to manage and minimise risks facing the organisation.

2. Data integrity

risk management dataIf you’ve ever tried to maintain multiple systems and databases you’ll know how difficult and time consuming this task is. As soon as one database is updated the other becomes outdated.

What typically happens is data submitted from a business unit, TPA or other source is re-typed or copied and pasted into a master database to provide a holistic view.

In an Experian report called "The Data Advantage: How Accuracy Creates Opportunity", the third-biggest cause of data-quality problems was multiple databases. We’ll be looking at the topic of data accuracy in future blogs, but, according to the report, the top two causes of data quality problems are:

  • Human error.
  • And, multiple points of data entry.
Another important point is that when, inevitably, conflicting data is discovered, extra time and effort is spent researching which one is correct and then updating the records.

With a single, integrated risk management information system, data entered in one location will always be from the original source and can be traced back to who entered it and when.

In addition, the system provides a number of fail-safes that check values entered for variances and errors and then alerts the necessary people.

3. Simplified report building and analytics

Typically, significant time and effort is required to build management reports when data is held in multiple databases. As well as extracting the data, it also needs to be standardised into a common format, which can increase the room for error even further.

This task is complicated further if the data is in multiple currencies and different languages. Once the extraction and standardisation is completed, the report can finally be built. Furthermore, this process has to be repeated each and every time the report is needed.

With a risk management information system these challenges largely go away as data is already standardised into a common format, currency and language. Reports can be generated literally at the press of a button and standard reports can be set up to be automatically generated and distributed. Furthermore, data can be filtered using an extensive range of criteria (for example, by date, by business unit, by region, by carrier).

The key advantage for the risk manager and the team is that more time can be spent analysing the information, spotting trends and correlations and making decisions and apportioning resources to manage the risks and exposures.

4. Better operational efficiency

With multiple systems and databases, employees will effectively be duplicating effort and performing the same manual quality checks and maintenance for their own ‘silos’ of data.

risk management dataWith a RMIS system, everyone who needs to can enter data into the same online system at literally any time. So, there is a consistent process for data collection across the entire organisation, and any changes can be made once and communicated from one system.

Furthermore, data held in other systems and by third parties can be integrated automatically into the same system via data loads or direct feeds.

5. Faster decision making

Another negative factor in maintaining multiple databases is that it can lead to delays in data availability. This is because data has to be entered from its original source, then consolidated and validated before it can be transformed into meaningful information for decision makers.

The knock-on effect is that this causes a significant delay in being able to identify patterns in risks and ultimately act on the information.

Delays can have a significant impact on revenue and also brand reputation, especially in the new social media world we live in. If you consider one aspect of a claim for example, delays in dealing with the claim can lead to higher legal costs, longer claims lifecycles and higher average costs of claims.

With a “one system” approach, you have access to data that is continually and instantly updated, enabling quicker identification of patterns and trends in the data so controls and actions can be put in place.

An additional advantage is that any measures that you put in place can be quickly evaluated to see how effective they have been.

6. Reduced IT maintenance requirements

This point is more focused on organisations using home-grown systems. Typically, enormous pressure is placed on the organisation’s IT teams to maintain and support different systems and to try and integrate them.

By investing in a risk management information system, organisations don’t experience these problems as the service provider will be contracted to provide the support and maintenance within set timescales.

Concluding thoughts

These are just some of the advantages that unifying your risk and insurance data into one system can have. In my mind they all add up to one thing, and that is simplifying decision-making by providing complete control of your enterprise risk and insurance data. This in turn means more time and focus can be spent on managing the total cost of risk and protecting the brand and P&L.

If you have any other advantages you’d like to share as a result of your experiences, we’d like to hear from you in the comments.

Steve Cloutman is the Managing Director of Aon eSolutions' Europe, Middle East and Africa operation. Steve is based in London and can be reached by email at Steve.Cloutman@aon.co.uk.

 

Nov 21, 2013

 | Originally posted on 

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